Date
24 January 2017
Property glut in small cities lies at the core of China’s real estate market weakness. Photo: Xinhua
Property glut in small cities lies at the core of China’s real estate market weakness. Photo: Xinhua

Can small Chinese cities dig themselves out of property hole?

The property glut in mainland China’s third- and fourth-tier cities is quite serious that even real estate guru Wang Jianlin has acknowledged it as a thorny issue.

Chinese authorities consider it a threat to the broader economy, and have made the clearance of property inventories in these small cities a policy priority this year.

While short-term measures like further reductions in down payments would help ease concerns, the real solution lies in creating sustainable, long-term demand for homes.

Top cities hardly have to worry about not having enough home buyers because people want to live in these places where there are better job opportunities and facilities such as schools and hospitals.

Thus, a fundamental way to stimulate residential property demand in small cities is to boost industrial clusters and job vacancies, as well as enhance environmental conditions and the quality of life, property consultant JLL said in a report.

The good news is the Chinese government understands the situation and is adjusting its policy focus accordingly.

Only by turning lower-tier cities into attractive places for living, working and doing business can we see a growing demand for local properties and a healthy real estate market.

– Contact us at [email protected]

CG

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe